David Ramsden: Opening remarks – Launch of the Artificial Intelligence Public Private Forum (BIS)


Opening remarks by Sir David Ramsden, Deputy Governor for Markets and Banking of the Bank of England, at the Launch of the Bank of England and the Financial Conduct Authority’s Artificial Intelligence Public Private Forum, London, 12 October 2020.

Isabel Schnabel: Pulling together – fiscal and monetary policies in a low interest rate environment (BIS)

Speech by Ms Isabel Schnabel, Member of the Executive Board of the European Central Bank, at the Interparliamentary Conference on Stability, Economic Coordination and Governance in the European Union, Frankfurt am Main, 12 October 2020.


Stress-testing banks during the Covid-19 pandemic (BIS)


  • In response to the Covid-19 pandemic, a number of authorities that regularly conduct stress tests on individual banks adjusted their approach. They performed ad hoc exercises to assess the vulnerability of banking sectors as a whole. These exercises are different from regular ones in terms of key features such as objectives, design and methodologies, and communication.
  • In the short term, such stress tests can support the assessment of the pandemic’s impact at an aggregate level.
  • As the pandemic evolves and its impact is better understood, authorities can further adjust their stress tests and refine their key features accordingly. That will allow for a more granular, bank-level assessment. It may also help authorities to achieve the necessary balance between keeping banks safe and sound, and ensuring an adequate flow of credit to the real economy.


Patrizia Baudino

Bankruptcies, unemployment and reallocation from Covid-19 (BIS)

Key takeaways

  • The expected wave of business failures in the Covid-19 recession has yet to materialise, due in part to policy support, but also reflecting the inherent lag between declines in GDP and insolvencies.
  • Bankruptcies weigh heavily on labour markets. Unemployment typically increases three times more if a fall in GDP is accompanied by a similar-sized increase in bankruptcies.
  • Concentration of bankruptcies in those sectors hit especially hard by Covid-19 could exert a significant drag on the labour market.
  • The natural renewal process where young, dynamic firms displace those who exited takes two to three years, leaving a protracted period of lacklustre activity. This underscores the need to reallocate resources quickly and efficiently to drive growth in the post-pandemic world.


Ryan Niladri Banerjee, Enisse Kharroubi, Ulf Lewrick

The outlook for business bankruptcies (BIS)

Key takeaways

  • Economic growth and forward-looking indicators of default risk inferred from equity markets, two variables that together predict business bankruptcies in advanced economies, show bankruptcies rising significantly by the end of 2021.
  • Projections of real GDP growth embedded in the consensus forecast account for the bulk of this projected increase. Unlike in previous downturns, the stock market-based default indicators contribute very little.
  • As these findings underscore, the pandemic and unprecedented government support for the business sector have driven a sizeable wedge between financial market perceptions of default risk and projections for economic activity.


Ryan Niladri Banerjee, Giulio Cornelli, Egon Zakrajšek